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From the home inspection to existing liens, who is responsible for paying which closing costs. (Getty Images)

The costs involved in buying and selling a home are often negotiable as part of the real estate deal. A buyer may be willing to offer the full asking price, as long as the seller is willing to cover the cost of a home inspection and deed transfer tax, for example.

Who pays certain fees can also depend on location – states have different real estate laws, and counties or cities may have their own standard practices for real estate transactions.

Here is a list of the closing costs buyers and sellers can expect in a real estate deal, followed by descriptions and who traditionally pays:

  • Deed transfer tax.
  • Recording fee.
  • Title search and title insurance.
  • Settlement fee.
  • Loan application fee.
  • Loan origination fee.
  • Points.
  • Home inspection.
  • Appraisal.
  • Survey.
  • Building or homeowners association fees.
  • Existing liens.
  • Real estate brokerage commissions.
  • Attorney’s fees.
  • Mortgage payoff penalty.

Transfer Tax

Who typically pays? Seller, buyer or both.

Often referred to as the deed transfer tax or real estate transfer tax, this is a required fee that's separate from property tax. The transfer tax is levied for the transfer of the deed to new ownership, and the buyer and seller may negotiate who covers the total cost.

You may find that separate transfer taxes for your state, county and city combine to a high amount; in some parts of the U.S., the taxes can reach nearly 5% of the purchase price. And in some cases, like New York state, that percentage increases with the home price. “Many people have renegotiated sale prices” as a result of this, says Tracie Golding, a licensed associate real estate broker for Stribling & Associates, a subsidiary of real estate brokerage Compass in New York City.

[Read: What’s Dragging Down the Value of Your Home?]

Recording Fee

Who typically pays? The seller, buyer or both.

The recording fee can be levied by the state or local government to cover the cost of filing the deed and mortgage information in the public record. In many state and local governments throughout the U.S., the transfer tax and recording fee are one and the same, while others keep the two required payments separate. While the transfer tax is a percentage of the sale price, the recording fee is typically a flat amount. In Los Angeles, for example, the fee varies based on the document but ranges from $75 to $225. In Polk County, Iowa, on the other hand, the recording fee is $12 for the first page of a deed and $5 for each subsequent page.

Title Search and Title Insurance

Who typically pays? The buyer.

Before you take ownership of a property, it’s important to make sure there aren’t any existing liens or other claims of ownership. As John DeMarco, broker and owner of Re/Max 5 Star Realty in Hollywood, Florida, notes, "The sellers might not be aware that there is a lien on the property.”

Title insurance protects you from future claims to the property and often includes the cost of the title search. Homebuyers can purchase title insurance for their own protection at the same time they pay for title insurance for their lender, which is often a required step in getting a mortgage and similarly protects the lender from claims to the property.

The cost of title insurance varies based on the value of the property, but many homebuyers pay between $1,000 and $2,000.

While lenders and real estate agents often have title insurance companies they work with regularly, you can shop around for a title insurance company that you like better or one that charges lower fees.

Settlement Fee

Who typically pays? The buyer or seller.

A title insurance company, escrow agent or attorney may handle the transfer of funds in the sale of a property and charge an additional fee for the work done at closing. The settlement fee could be directed at the buyer, seller or both. However, this fee, which may be included in title charges or attorney's fees and is often at least a few hundred dollars, can often be negotiated between the buyer or seller to sweeten the deal beyond the sale price.

Loan Application Fee

Who typically pays? The buyer.

Some lenders levy a fee upon formal application for a mortgage, primarily to ensure the buyer is serious. This is a flat fee, often as small as $25.

Loan Origination Fee

Who typically pays? The buyer.

Loan origination typically covers the underwriting process – when the lender determines whether you are worthy of a mortgage.

Your lender may charge separately for various costs that would otherwise fall under loan origination – namely, the credit check to determine your creditworthiness for a mortgage. Other lenders keep the credit check “fully lumped into one fee,” says Max Koziol, senior lending manager for JPMorgan Chase, which does so. Loan origination fees are around 1% of the total mortgage amount.

Points

Who typically pays? The buyer.

At closing, a homebuyer getting a mortgage may pay additional fees to the lender to reduce the interest rate for the loan. One point is the equivalent of 1% of the loan, so if you'd like to pay down 2 points of a $300,000 mortgage, for example, you would pay $6,000 for your interest rate to drop from 4.5% to 4%, though how much the interest rate drops depends on you and your lender.

Paying down the interest rate with points isn’t required, however. It's solely based on cash the buyer has available and is willing to pay at the time of closing. Paying points can be a valuable tool for reducing the total cost of the loan, although it does increase what you pay at closing. If your focus is decreasing closing costs, lenders can often comply, but it's at the expense of a higher interest rate, DeMarco says. While a higher interest rate may mean lower closing costs, the buyer is ultimately paying more for the house in the long run. "That's a trap a lot of consumers fall victim to," he says.

Home Inspection

Who typically pays? The buyer.

During the due diligence period before closing, a certified professional often conducts a home inspection to check the condition of the home and point out maintenance issues, necessary repairs or possible code violations. Some lenders require an inspection to check for defects that may not be apparent in an appraisal, but buyers often opt for an inspection to learn what repairs will be needed after they get the keys.

While the cost of inspection typically falls to the buyer, this expense is negotiable. A home seller may also choose to have a prelisting inspection, which the buyer can accept or opt for additional inspection during the due diligence process. HomeAdvisor reports the typical price range for a home inspection is between $278 and $390, but it varies depending on the inspector and size of the home.

[Read: Why You Should Sell Your Home in 2019.]

Appraisal

Who typically pays? The buyer.

Many lenders require an appraisal to determine the property's value before approving a purchase loan and to ensure it matches or exceeds the agreed-upon sale price. An appraisal helps reduce the lender’s losses in a the scenario where the borrower defaults on the loan.

You can seek a different appraisal company than the one your lender recommends. Don’t be afraid to shop around and compare costs, but be sure the appraiser you choose is one the lender will accept before you pay for the assessment.

Survey

Who typically pays? The buyer.

If there’s any confusion about where the property starts and ends, a property survey may be necessary. To determine the definitive boundaries of a property, it’s typically best to contact a professional surveyor who can follow the precise measurements of the property’s legal description.

A survey may be required by the lender, which naturally falls to the buyer to pay. However, this expense may be negotiated to become the seller’s responsibility.

Building or Homeowners Association Fees

Who typically pays? The buyer.

If the home you purchase is part of a community managed by a homeowners association, you may be required to join an HOA and pay the associated fees at closing in addition to monthly or annual dues.

For example, in New York City, where many homeowners live in buildings that are part of a co-op or condo association, potential buyers are often required to apply to the community board in addition to making an offer on the individual unit.

In a more suburban setting where an HOA manages a community of single-family homes, the HOA may charge a fee for placing the home on the market and for the paperwork associated with transferring ownership of the home in its own files.

Because these fees differ by state, community and building, buyers should keep them in mind when making an offer. A seller may be willing to cover a hefty HOA fee in exchange for a slightly higher sale price.

Existing Liens

Who typically pays? The seller.

If a lien is discovered during the title search, the issue must be resolved before the deed can be transferred to new ownership.

In cases where the seller was unaware of the lien or now has the funds to right the issue, the seller is responsible for working with the lien holder to resolve the issue. In cases where the seller is unable to pay, however, the buyer can decide if he or she wants to try to resolve the lien or walk away from the deal.



Real Estate Brokerage Commissions

Who typically pays? The seller.

No doubt that real estate agents get paid once a deal closes. Traditionally, the seller pays the commission to the real estate brokerages that represented both the buyer and seller from the proceeds of the sale, which typically runs between 5% and 6%, split between the two brokerages. The real estate agents then receive their share of the commission.

Attorney’s Fees

Who typically pays? Buyer and seller, for respective attorneys.

In some parts of the U.S., such as New York City and Chicago, a real estate attorney takes over the due diligence phase once a contract is signed for a property. The title search, appraisal and any other assessments of the property are overseen by the attorney, rather than an escrow or title insurance representative.

Of course, buyers and sellers using an attorney for these steps should expect to pay their attorney’s fees in addition to the fees for services conducted by the attorney, like a title search.

[Read: Everything You Need to Know About a Pending Home Sale]

Mortgage Payoff Penalty

Who typically pays? The seller.

Before you sell your home, check your existing mortgage agreement to see if there are any penalties associated with paying off your mortgage before the end of its term. The penalty may vary based on a percentage of the loan – 3%, for example – or a certain number of months' worth of interest payments. The Consumer Financial Protection Bureau notes that any prepayment penalty must be included as a clause in your original mortgage statement.


The Best Apps for House Hunting

Browse for homes – and maybe even close a deal.

Woman on smartphone

(Getty Images)

Luckily for homebuyers, house hunting apps are growing in number and sophistication. As the online real estate marketing industry becomes more competitive, mobile apps are getting better at helping consumers find accurate housing information while offering features to help users narrow down their search. Read on for some of the most popular and helpful apps to use when searching for your next house. All apps are available on both iOS and Android.

Updated on Nov. 6, 2019: This slideshow was published at an earlier date and has been updated with new information.

Zillow

Zillow

(Courtesy of Zillow)

This is the most downloaded real estate app for both Apple and Android phones, and it includes Zillow's signature map and home value estimate tools. With more than 100 million homes in its database, Zillow's app is the most popular method for users to explore the platform. In fact, Zillow reports that more than two-thirds of its usage takes place on a mobile device, jumping to more than three-quarters on the weekends.

Best feature: The app’s dashboard includes a Your Home tab that allows you to store your property’s information and see how its value estimate changes over time.

Pro: You have the option to filter your saved searches by property listings that have recently changed, so you don’t have to scroll far to see if a house's asking price dropped.

Con: As much as you may want it to be, the Zillow Zestimate isn’t a guarantee of what your home will sell for.

Realtor.com Real Estate Search

Realtor.com Real Estate Search

(Courtesy of Realtor.com)

Filters on this app's search function allow you to include specific details on your must-have list, such as multiple floors, a fireplace, central air and even community swimming pools or security features.

Best feature: With the Sign Snap feature, you can take a photo of a real estate sign you see in a neighborhood and get details about the property right away.

Pro: You have the option to connect with a real estate agent who can represent you as the buyer in a deal, but you can also see the contact information of the listing agent if you want to talk to him or her directly.

Con: The more specific filters rely on listing agents using the right keywords, so if you’re struggling to find everything you want in a house, you may have to widen your search and keep an eye out for details in listing photos.

Trulia

Trulia

Fascia and Ridge of Gable Roof

(Getty Images)

Trulia’s app gives users a desktop-like experience in a mobile platform, with a focus on design that makes it easy to use.

Best feature: Trulia polls its online users who live in specific neighborhoods and includes the results on the app. For example, you might find that 93% of one neighborhood's respondents feel comfortable walking alone at night or that 76% say kids play outside regularly.

Pros: On each property profile, Trulia lists local legal protections, noting whether there is legislation in the area to protect against discrimination for gender identity or sexual orientation in employment, housing or public accommodations.

Cons: On any property profile, you’re prompted to call or email an agent about the property. While this is convenient if you’re serious about buying but don’t have an agent, it can get in the way if you’re just browsing.

Redfin Real Estate

Redfin Real Estate

Stock image of someone holding a smart phone.

(Getty Images)

Since Redfin utilizes an out-of-the-box business model with agents and professionals specializing in different steps of the homebuying and selling process, the company’s app serves as a way for users and Redfin agents to communicate. A map indicates which properties are listed by Redfin or another broker and also notes homes that are likely to sell fast through its Hot Homes feature.

Best feature: You can schedule a tour with a Redfin agent directly through the app. The app even lists the next available tour time.

Pro: You can click the heart symbol to keep a property you like on your radar, and you can also nix properties so they don’t keep popping up in searches.

Con: If you don’t live in one of the 80 markets where Redfin has agents, the app offers local listing information pulled from the MLS, but you won't be able to utilize the features that connect you with Redfin agents.

Homesnap Real Estate & Rentals

Homesnap Real Estate & Rentals

(Courtesy of Homesnap)

Homesnap gives house hunters the reins with this app. A signature feature allows users to take a photo of a home, and the app will identify the property and provide details about it from the local multiple listing service or public records.

Best feature: The beginning of each property profile details the property history, including previous sale prices and when it last went on market.

Pro: Each home has a section that allows you to determine your commute route and time and see both map and street views of the property.

Con: The property details are in list form, which you can expand to see everything from the home's architectural style to number of bathrooms and homeowners association fees. The depth of information is helpful, but long lists can make it easy to lose focus and miss key criteria.

Homes.com

Homes.com

Woman on her phone

(Getty Images)

On this app, you can search based on your needs and desires, including buying versus renting, home value information for properties on the market and what neighborhoods are ideal based on your preferred commute time.

Best feature: An exclamation point in the corner of a property profile lets you know that it’s a new listing, which can help you move quickly to avoid competition with other buyers.

Pro: If you'd like to get in touch with a local agent, the bottom of a property's profile often lists more than one option, making it easier for you to shop around for the right agent.

Con: While Homes.com has much of the same property information as other house hunting platforms, the app doesn't offer much in the way of neighborhood information.

Estately Real Estate

Estately Real Estate

Mature businesswoman at cafe

(Getty Images)

Estately aims to connect consumers with the right local real estate agent, and its app offers multiple ways to get in touch with agents.

Best feature: Users can click on icons on property profiles for quick information on taxes, utilities, appliances, schools and more. Profiles also include scores on things like area noise pollution and internet speed – details that aren’t always considered but could be deal-breakers.

Pro: The app encourages you to see houses in person, with multiple opportunities on a property profile to schedule a day and time to visit.

Con: Estately only covers markets in 40 states, so those looking for homes in Arkansas, Iowa, Kentucky and several others are out of luck.

Century 21 Local

Century 21 Local

(Courtesy of Century 21)

A longstanding national brokerage, Century 21 provides consumers with access to home listing information pulled from the local multiple listing services. The app can particularly come in handy if you plan to use a Century 21 agent, as that’s who you'll be in touch with if you would like to inquire more about a property.

Best feature: The app provides a notes section for every property, so you can keep track of your impressions as you compare homes.

Pro: If you start searching for homes in a different city, information about the local Century 21 brokerage you should contact changes accordingly, although you can still see listings from brokerages outside Century 21.

Con: This app pulls from Zillow to provide home value estimates, but occasionally lists "unavailable" even if the property has a Zestimate available on Zillow.

The best apps for house hunting include:

The best apps for house hunting include:

A row of detached homes in an idyllic community in Fredericksburg, Virginia

(Getty Images)

  • Zillow.
  • Realtor.com Real Estate Search.
  • Trulia.
  • Redfin Real Estate.
  • Homesnap Real Estate & Rentals.
  • Homes.com.
  • Estately Real Estate.
  • Century 21 Local.

Read More

Tags: real estate, housing, housing market, home prices, existing home sales, pending home sales


Devon Thorsby is the Real Estate editor at U.S. News & World Report, where she writes consumer-focused articles about the homebuying and selling process, home improvement, tenant rights and the state of the housing market.

She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.

Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at dthorsby@usnews.com.

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